Gardner Leader

The Employment Equality (Age) Regulations came into force on the 1st October 2006 to implement the age discrimination strands of the European Equal Treatment Directive. The Regulations introduced a default retirement age of 65 amongst other things, which effectively allows employers compulsorily to retire employees on their 65th birthdays, provided that the prescribed statutory process is followed. This provided employers with a defence to unfair dismissal claims where the employee was over 65 and dismissed by reason of retirement. The regulations also permitted potential employers to refuse job applicants on grounds that they are 65 or within 6 months of their 65th Birthday. Now these two provisions (and some others) are facing a direct challenge in the European Court of Justice.

Heyday, part of Age Concern, is challenging whether the procedure under the regulations allowing compulsory retirement at 65 is lawful, because the default retirement age allows employers to retire employees at 65 or over for no other reason than their age.

The justification defence allowing direct discrimination on the grounds of a person’s age where there is a genuine occupation requirement is also being challenged.

If the ECJ rules that the default retirement age fails to implement the directive, and amounts to age discrimination, the regulations will require amendment, so that employers will no longer be able to rely on the retirement as a fair reason to end the employment of employees over 65.

Following a recent court of appeal decision, all cases relating to the retirement age have been put on hold pending the outcome of the Heyday case.

Depending on the outcome of this case, potentially any compulsory retirement could amount to age discrimination and an unfair dismissal. You would need to make a claim to the Employment Tribunal within three months of your dismissal and your case would be put on hold until the Heyday case is concluded.

The likelihood is that the decision will come in the summer as the date of the trial has been set for the 2nd July 2008.

Until this case is decided, it appears that the best advice is to continue to employ employees who have reached the current retirement age, unless there is a very clear reason why they should no longer be employed. If there is a fair reason (other than age) to end their employment then appropriate action should be taken under the Statutory Discipline and Dismissal procedures and any reference to retirement should be avoided.

It would also be advisable to get any employees (and in particular those over 65) to sign a compromise agreement on the end of their employment, effectively settling their rights to make a claim against your company.

If your application was rejected within the last three months, you may be able to present a claim to the Employment Tribunal. Again, your case is likely to be stayed until the outcome of the Heyday case is known.

This is a contentious area and if you would like advice on any of the issues raised or more information on Gardner Leader's Employment team, please click here.